US Perspective—10.04.18
10/04/2018
www.themaxfieldreport.com
Most packers started last week in possession of offer lists that were very populated, a full complement of offers and sizeable quantities attached to most offers. Shipping times on several of the selections were earlier than a couple of weeks ago, supporting speculation by many members of the trade that many of the packers had hides ready available to ship.
This has led to speculation that many of the packers do not possess the sold-forward positions they have been advertising, and that harvest levels are set to see a substantial increase as we move forward. Packers appeared to be a bit more tolerant of price ideas under their asking prices, this in spite of the fact that the last couple of weeks of sales for packers have been the largest two weeks of the year, with 1.3 million wet salted and wet blue hides sold.
Reports from the cowhide trade claim offer lists from producers last week appeared fairly well populated.
Producers continue to struggle, as popular opinion among buyers is that producers need to sell. This is resulting in a number of buyers bidding aggressively lower in order to test the mentality of producers. The number of cows in the harvest mix is running close to 10% higher than a year ago.
Producers had little choice but to be willing to negotiate prices, while some producers appeared as if they were able to duplicate levels close to their last traded levels on HNDC, while trading on HNC also close to last week. Meanwhile, sales on HBC remain a difficult task as there are many for sale.
We are leaning toward the opinion that producers enter this week not as far sold-forward as they would like. This, coupled with the prospect of harvest levels moving towards the 620,000 head levels and time running out on tanners booking some new orders for the current busy season, has many members of the trade leaning towards thoughts that the hide market could be in store for a very long summer.
Current trading levels are not deemed expensive by anyone’s standard, while the problem facing the market is a real lack of demand. The prospects for demand improving in the near-term fades as we move closer to May. If we were a seller, we would be selling into this market the best we could.
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